A succession of asset bubbles has formed in China, caused by a torrent of speculative money sloshing from stocks to bonds to commodities. The biggest apparent bubble is in housing, but prices have surged for niche assets, too, such as calligraphy, antiques and art. In May, futures prices for soybean meal, used as pig feed, jumped 40%. The trading volume of 600 million tons was nine times higher than China’s annual consumption. The pipe-making material PVC is up 40% so far this year on the Dalian Commodity Exchange.
President-elect Donald Trump, a harsh critic of U.S. intelligence agencies, is working with top advisers on a plan that would restructure and pare back the nation’s top spy agency, people familiar with the planning said. The move is prompted by his belief that the Office of the Director of National Intelligence has become bloated and politicized, these people said…..The view from the Trump team is the intelligence world has become completely politicized,” said the individual, who is close to the Trump transition. “They all need to be slimmed down. The focus will be on restructuring the agencies and how they interact.”
The 1948 Italian election was supposed to be a nail-biter, and one with potentially major consequences in the early days of the Cold War. Back then, Italy had one of the strongest communist parties in Western Europe, which relied on Soviet financial assistance, and the Americans’ recently established Central Intelligence Agency worried that the reds were about to establish a beachhead in what a memo to the White House described as “the most ancient seat of Western culture…..Using declassified documents, statements by officials, and journalistic accounts, Levin has found evidence of interference by either the United States or the Soviet Union/Russia in 117 elections around the world between 1946 and 2000, or 11.3 percent of the 937 competitive national-level elections held during this period. Eighty-one of those interventions were by the U.S. while 36 were by the USSR/Russia. They happened in every region of the world, though most commonly in Europe and Latin America. The two powers tended to focus on different countries, though Italy was a favorite of both, receiving eight interventions by the U.S. and four by the Soviets.
But today, Grillo’s position on Russia has radically changed. He is now part of a growing club of Kremlin sympathisers in the west – an important shift given that the comedian has become one of the most powerful political leaders in Italy and his Five Star Movement (M5S), the anti-establishment party he created in 2009, is a top contender to win the next Italian election. Some of Grillo’s lieutenants in the Five Star Movement are vocal supporters of Putin’s policies, including in Syria, where the party’s top spokesman on foreign policy, Manlio Di Stefano, has praised the shelling of Aleppo as a “liberation” of the city.
Retailers are bracing for a fresh wave of store closures at the start of the new year. The industry is heading into 2017 with a glut of store space as shopping continues to shift online and foot traffic to malls declines, according to analysts…..The US has 23.5 square feet of retail space per person, compared with 16.4 square feet in Canada and 11.1 square feet in Australia – the next two countries with the highest retail space per capita, according to a Morningstar report from October. “Across retail overall the US has too much space and too many shops,” said Neil Saunders, CEO of the retail consulting firm Conlumino. “As shopping patterns have changed, some of those shops are also in the wrong place and are of the wrong size or configuration.”
The backdrop: after 36 years of bond bull market, the amount of US bonds has ballooned to $47 trillion, up 24% from just ten years ago…..Bonds dwarfs the US stock market capitalization ($27 trillion). Bonds are a global phenomenon with even bigger bubbles elsewhere, particularly in NIRP countries, such as those in Europe, and in Japan. That’s why bonds matter. They’re enormous. And the damage they can do to investors is huge.
Allen Dulles, the CIA director under presidents Eisenhower and Kennedy, the younger brother of Secretary of State John Foster Dulles, and the architect of a secretive national security apparatus that functioned as essentially an autonomous branch of government. Talbot offers a portrait of a black-and-white Cold War-era world full of spy games and nuclear brinkmanship, in which everyone is either a good guy or a bad guy. Dulles—who deceived American elected leaders and overthrew foreign ones, who backed ex-Nazis and thwarted left-leaning democrats—falls firmly in the latter camp.
At the most fundamental level, China lacks sufficient funds to take adequate precautions on the heels of 2016’s carnage; last year the yuan suffered its steepest annual decline in more than two decades. Managing that devaluation was anything but free of charge. Estimates suggest China’s foreign reserves will hold at $3.01 trillion when the latest batch of data are released January 7th. Still, that’s down a cool trillion to a five-year low. More to the point, it’s going to continue to be costly to continue to defend the yuan given the trajectory of the currency’s sickly slide. That’s saying something considering some estimates suggest $2 of the $3 trillion are inaccessible — $1 trillion earmarked to construct the Silk Road and another $1 trillion that’s illiquid.
It’s a bad start to 2017 for the European Central Bank. The collateral freeze that plagued the 5 trillion-euro ($5.2 trillion) securities lending market at the end of last year is still very much with us, and in fact has got worse. It’s not as if it didn’t try. At their Dec. 8 meeting policy makers took steps to unblock the piping of Europe’s financial system by tackling an extreme shortage of the short-dated bonds that firms can use as collateral in repurchase agreements. These deals operate like high-quality loans, whose proceeds are used for activities such as financing the purchase of other securities. Without a properly functioning repo market a range of other everyday activities, such as bidding at bond auctions and hedging underwriting risk, will grind to a halt.
The broad consensus is to own stocks and to sell gold. But, as I have discussed since 2003 in my annual Surprise Lists, the broad consensus of investors is often wrong. Indeed, it is often the case that the very coalescing of popular opinion behind an investment tends to eliminate its profit potential.